Impact of Export Sophistication on Trade Diversification: The Mediating Role of Participation in Global Value Chains

Shamrez Ali and Qaiser Munir

Journal of Business and Social Review in Emerging Economies, 2022, vol. 8, issue 2, 531-546

Abstract: Purpose: The objective of this study is to analyze the nonlinear impact of export sophistication on trade diversification under the influence of participation in global value chains (GVCs) in a panel of countries.Design/Methodology/Approach: For this, the current study constructed a panel of 105 economies covering the period 2011-2018. For empirical analysis, this study applies the static panel threshold test proposed by Hansen (1999).Findings: According to the results of this study, export sophistication and participation in global value chains have a positive association with trade diversification. In addition, this study finds two thresholds of participation in GVCs that divide the impact of export sophistication on trade diversification into “lower regime”, “moderate regime”, and “upper regime”. &The “upper regime” corresponds to the largest value of the coefficient of export sophistication followed by “moderate regime” and “lower regime” respectively. Therefore, the impact of export sophistication on trade diversification is nonlinear. &Implications/Originality/Value: Therefore, this study suggests that countries should produce sophisticated products and increase their participation in global value chains.&&&& &&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&

Keywords: Threshold; Global value chains; Market concentration; Trade diversification; Export sophistication (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:src:jbsree:v:8:y:2022:i:2:p:531-546

DOI: 10.26710/jbsee.v8i2.2363

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